While the landscapes of the UK & Irish Protection markets continue to innovate, customers are also increasingly interested in understanding their health and monitoring both their physical and mental wellbeing. Often those interests are associated with a shift in customer behaviour and the digital transformation the industry is experiencing. In the latest research from Pacific Life Re, they look closer at the customer perceptions of Value-Added Services and the opportunities those online services present to insurers to engage holistically with the needs of the end consumer.
Over 1,000 people across the UK and Ireland took part in this research, with 69% considering Value-Added Services (VAS) to be an appealing addition to their Protection policy. Most providers of these services reported an increase in usage of their respective Value-Added Services, especially remote GP during the Covid-19 pandemic. The increase in usage by customers highlights the importance of offering easy access to convenient medical support. These services can take many forms, from reactive support such as 24/7 virtual GP consultations, second medical opinion and physiotherapy, to more lifestyle related services, to keep people in good health.
What do customers really think of VAS?
Naturally, when considering a protection product, customers are looking at the whole package, with price being a key factor. 41% of the surveyed existing protection holders stated that price is their main priority, closely followed by comprehensiveness of cover and brand. However, 17% of existing protection customers still said VAS were an important factor of the overall proposition.
As we looked beneath the surface to understand the key audiences using VAS and to see the long-term value in it, we found that those in the 18 to 30 age group, or who had chosen Critical Illness or Income Protection as well as Life, and also those with children, were more likely to say VAS was important when choosing a policy. These customers can clearly see the value in these services. However, this begs the question of whether the Protection industry is doing enough to educate all customers on what VAS is, and what's included, so customers can make a more informed decision when choosing a policy.
The research also revealed that those who received professional financial advice were much more likely to prioritise VAS when selecting a policy. The role of intermediaries is crucial because during the advice process, they can provide more clarity on the long-term benefits of VAS as well as the ease of access to medical support that can offer peace of mind.
Interestingly, over 50% of Protection customers were either unaware or unsure if they had VAS included in their policy. This revelation suggests that providers have more work to do, working alongside advisers, in promoting the availability and eligibility of their Values-Added Services to ensure customers are using them effectively.
The latest research also demonstrates the pivotal role protection insurers can play in helping customers to manage and improve their health. It's clear that people are interested in understanding their health with over two thirds saying they would value a health check as part of their insurance cover. Guiding customers through their health journey and encouraging them to maintain a balanced and active lifestyle is where VAS can have a particular impact.
In terms of usage, we see good levels overall, but there is a mixed picture in experience (see chart). We see that some of the proactive preventative services tend to have the best experience amongst customers.
So, what is the verdict? VAS have high customer appeal and provide an opportunity to deliver more value to protection customers. However, the research highlights there is more work to do in raising awareness of existing services, and there is a role for both insurers and advisers to help achieve this. The future of VAS looks bright though, and whilst the research points to a few ways they could develop, for example, through greater use of preventive services and greater tailoring to customer needs, we expect these services to become an increasingly vital part of Protection propositions in the future.
‘Navigating the ocean of Value-Added Services' is the first annual report from Pacific Life Re and their new series ‘Beneath the Surface'. The report explores the key insights from customers and shares opinions from VAS service providers, analysing the future of VAS. You can get a free copy here.
This post is sponsored by Pacific Life Re.